Best Practice Report


7. Next steps

The emerging body of literature on green finance, particularly as related to climate finance initiatives, provides valuable evidence of how governments are utilizing public resources to mobilize private sector investment in green growth. Deeper research and analysis are needed to better understand both what is currently effective and the future role public finance in scaling up green investment. Consideration of a broader array of cases than possible in this project might make it possible to draw more generalizable conclusions on lessons for public finance of green growth. The relative novelty of many green financing approaches, including those in some of the case studies considered here, makes it difficult to conclude on the long-term impact of the measures at such an early stage.

Future research should try to provide an understanding of which local conditions and barriers require which policy and financial instruments. There may be key tipping points for private investor behavior that, if correctly identified, could be targeted with the necessary policies and measures. This information would be useful for policy makers deciding a long-term program of measures to deliver green growth and accompany public finance with a view to mobilizing private investment.

In addition, it would be useful to analyze more deeply the effects of different sources and uses of public funds, including whether and how the different types of fund sources affect the outcomes and what uses of public funds have the greatest successes. Policy makers need more information in deciding which form of public finance for green growth to select and the implications of the options available.

There also remains a paucity of data available on both the financial terms and conditions by which public finance is used to mobilize private sector investors and the outcomes resulting from financial instruments. Greater transparency of how public resources are being deployed would significantly help build a much stronger body of evidence of good practice in green financing. Some standardization of the way data on financial instruments is collected and presented would allow better comparison of results and conditions of operation. There is scope for collaboration between governments to collect harmonized data in this area and this should be encouraged.

Some innovative approaches by governments, central banks and the multilateral DFIs are beginning to address the challenge of attracting affordable long-term finance for delivering scaled up investment. Future research should build on the results of the new UNEP Inquiry on sustainable finance, which will explore how financial regulation may be consistent with a green economic transition. A question for future researchers in the area of long-term mobilization of capital for green investment will be how to tap mainstream fixed income and equity capital to support green development and the role that institutional investors might play in this.